Is $2M Enough for Your Retirement Video from Savant Wealth Management

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Welcome to today’s live savant webinar. Thank you for joining us. My name is Danielle Moore. I am an financial advisor in our Naperville, Illinois office. I’m thrilled to be part of this conversation today. Okay, we’re answering a question of is $2 million enough for retirement? I hear this all the time. We’re using the number 2 million. It could be any number you want to put in there. And I’d say as a financial advisor and you’re trying to make sense of your retirement goals, the desire is to feel confident about your future. And I’ve helped many people in my 20 plus year career navigate the numbers, the emotions, and the really big decisions that come with it. So, I’m going to help you navigate that in today’s webinar alongside my partner and one of my favorite colleagues here at Savant, Ashley Olivas. Ashley. Thanks, Danielle. Hello everyone. My name is Ashley Olivas. I’m a financial adviser in Savant’s Santa Fe, New Mexico office. My background is in both financial planning and tax. I’m a CFP and also a CPA. and I work closely with individuals and families who are approaching retirement to help them make sense of that big question we’re here to talk about today. How much is enough and how do you make it last? so our agenda for today, we’ve got a couple of items that we want to cover for you. First of all, taking a holistic view, looking at the broad big picture, and then getting a little more detailed about what are spending habits, the financial lifestyle that’s needed, and with Ashley’s expertise as a CPA, the tax impact on retirement income. This is very important to make sure that you keep more of your wealth where possible with planning strategies. And then we’re going to step into, well, what are some common missteps? Where do people go wrong? what should you look out for potential pitfalls and then we’ll bring it all together with some examples and take it home as actionable items and next steps for you. So, thank you so much Ashley and I’m going to kick it off with you to take us at a holistic thousand foot view to begin. Thank you. So, what I enjoy most about this work is helping people to connect the dots between their goals, their cash flow, their taxes, and their investments. Because what we know is that retirement planning isn’t just a math problem. It’s about building a plan that’s going to support the life that you want both now and also decades into the future. So when people ask how much is enough, that answer is almost always it depends. And the reason it depends is because retirement planning isn’t just about investments. It’s about how all of the areas of your financial plan work together. So we want to step back and look at the bigger picture before we dive into some more specific decisions. So on this slide here, what we like to see is if you’re if you’re not familiar with Savant already, this visual will show you a little bit more about how we plan at Savant. So investments matter, but of course so do taxes, so does risk management, cash flow, education planning, estate planning, charitable planning. So if one area is out of alignment, it’ll often create stress or inefficiency elsewhere as well. On our next slide, we can see that even before you talk about numbers in a financial plan, we really should understand what your retirement will actually look like. And so, we believe that lifestyle defines the plan, not the other way around. Two households with the same exact net worth could need very different plans depending on what their goals and objectives are. On our next slide, we’ll take a look at a few questions to be able to consider what gives us insight into the uncertainty that you might be experiencing in your financial plan. Considering these questions, give us insight into a little bit of what the uncertainty is in your financial plan, not just their preferences. We’ll consider timing, where you’ll live, what you’ll do, who you’ll connect or engage with, and then we talk about how you do that. Retirement planning is really about planning around all the change that occurs. On our next slide, we’ll take a look at the holistic view because more than anything, sustainability matters above balances. So, we want to understand where your income will come from and how reliable it is. We also want to make sure we know how dependent your plan is on market performance. Are there any future care expenses that we should prepare for or assets in your plan that aren’t serving a purpose anymore? These kind of questions help us to stress test our financial plan. At a high level, retirement outcomes can come down to three things. How much you save, how your money grows, and how long you’ve saved. There are some variables that we can control and some that we really can’t. So, what’s important is to make sure that we optimize all of the parts that we can control and then build some flexibility around the parts that we can’t. That mindset will help to carry through the rest of today’s conversation. And with that foundation, I’ll hand it back to Danielle to walk us through spending habits and lifestyle. Great. Thank you, Ashley. I think what I took away most from what you said is how much is enough? It depends, right? And that feels like you’re not answering the question, but it is. It’s specific to you. So, is that $2 million nest egg enough for you? I don’t know. We have to get in the details of your specific situation. So, here at a broad level, the first strokes of the pen, where do we look at for your specific planning? First, budget. We’re beginning there with essentials. Essentials being maybe you have a low interest rate mortgage that you’re still hanging on to because you’re primarily just paying back the principal. So that’s a necessary that expense that’s going to continue for the next 10 years for principal and interest. Fine. That’s there no matter what. Your food expenses, your day-to-day homekeep, upkeep, your maintenance, things like that. know what those numbers are. And then we get into lifestyle. Okay. If you’re no longer working, it becomes the phrase of every Saturday, every day becomes a Saturday, right? So, what does that look like for you? What do you want to spend? Can be very different from one person to the next. So, some of those essentials might be travel that may be very important to you in the early years. Volunteering your time, having a part-time work, helping with grandkids, gifts, whether they to be family or to charity. Maybe you want to pay for a wedding or two. What does all of this look like for you? I’d say what we want to stress is that the human experience is not linear. So thinking about what does this look like for you and whatever p plan you map out in the beginning is likely going to look different several years in. So how do we pivot? But we need a place to start. And then we have listed here in the middle guarding against inflation and expected unexpected cost. I’d say we’re all wellversed now in the way of inflation since the pandemic. Really in 2021, we had our first spike that we’ve seen in a long time. So retirees are pretty familiar and approaching retirement, what inflation looks like. So just remember that retirement can be decades long, 30 plus years, right? So how do those expenses today translate to future expenses? You really need to account for that so you’re not caught off guard. And then we say unexpected expenses. What are the unknowns? So Ashley and I help individuals retire every day. So we may be able to point some things out that you haven’t yet considered for your specific situation, but take some pen and paper there and plan for what’s the unknown. Leave some wiggle room. And then the last bucket here in this blue I think is really important to say spending flexibility. What do we mean by that? Again, spending is not linear. And if you have these larger ticket items, maybe you have more comfort with risk and you have larger variability and returns in your portfolio. And it’s a down market in any given year. But we certainly have downturns and you’re certainly going to experience them in your retirement multiple times more than likely. So maybe if the market is off in any given year, you delay that international trip and maybe you travel domestically for that year. Maybe you put off the car purchase. That type of flexibility allows you to extend your lifestyle in terms of security and the number of years that you can spend. So having a little bit of flexibility gives you a significant amount of cushion and greater certainty in terms of outcome. All right, with all these unknown and unpredictable items, it’s also important to factor in these decisions that you have to make that are permanent on the myriad of complexities within your plan. So, one of them listed here would be social security. Social Security can be a permanent decision and it’s important. We have webinars entirely dedicated to the nuances of social security. We have webinars dedicated to Medicare because these are complex and broad topics that can go really deep. But a high level social security once that decision is made, it’s going to impact spousal benefits. It’s going to impact survivor benefits. If you have a significant difference in ages between spouses, that should very much be considered. If you have different earnings paid in over time that are drastically different and one benefits significantly higher than the other, you want to be very mindful of that for survivors benefits as the survivor is only going to get the higher of the two benefits. There’s a lot of things to consider around what we’ll call these permanent decisions. Then we have here listed pensions. Pensions can be something that still exists for those of us that are lucky enough to participate in a pension program. But for example, you may have a defined benefit pension that’s promised to you in a handful of years. You’re going to retire in the near future, but this year it becomes frozen. There’s no more additional contributions put into place. That’s not an uncommon example. And therefore, what you had originally planned as your pension benefit has now been forever altered by that change in the plan status. So, you want to make those decisions and bring them all together. Also, maybe your pension gives you an additional boost if you delay it past age 65. Some pensions don’t give any growth. You don’t want to miss out on anything. So, make sure you review these irrevocable decisions. And finally, investments. If you’re someone who’s going to jump out of the market, move to cash, take no market risk, that is a permanent decision that is forever going to alter the path and trajectory of your portfolio in retirement. So all of these decisions should come together to bring together the portfolio that’s going to sustain you through uncertain times, markets, inflation, interest rates. And finally, we’re saying factoring in health care and longevity. Health care, we think about the fact that our health needs and expenses generally increase at a higher rate of inflation than are your normal everyday living expenses. So in our planning projections, our Monte Carlo, our planning software, we’re stress testing those with a higher rate of inflation than your normal living expenses. Longevity, what if you plan for a shorter life, but you’re still here? I can’t have you coming in your 90s and saying, “Well, I outlived my plan.” That’s not that’s not a successful plan. So, we have to make sure that your resources can survive all these unknowns and uncertainties and plan for the unexpected. Essentially, you need to be well prepared. Now, this page here, this slide is something that you look at and you say, “Oh, there’s a whole lot going on this page.” I agree with you, but it’s also my very favorite slide that we have here at Savant. Why is that? because it encapsulates all the pieces of planning that we do in a visual manner that you can easily follow along with. So this slide is looking at how much do we have in the way of total income and it’s looking at it from today moving forward throughout retirement until what we call end of planned or end of life. We have beginning here an orange line that represents the amount that’s being spent each year. I think this graph is chosen because it’s a simple $100,000 number. So you can scale it up or down for your specific situation. And then if you look at this orange line, we’re going about retirement and then boop, it pops up a little bit and then a handful of years again later it pops up again and then again. That weekend sequence of returns may be a car purchase. It may be the year for international travel. And maybe every 5 years we’re going to take the family on a large trip and include everyone, right? So how do we budget for these items? Again, these are not linear. So that’s why it’s hard to say is X amount enough for me. This is why you have to get into the details of your specific situation. So if that orange is on this upward trajectory because it’s increasing with inflation over time and maybe on this chart we have in 2037 that orange line comes down a little bit. The reason there may be for example you still had the principal and interest on the mortgage but it’s now paid off. Right? So expenses come down a little bit. You still have the real estate taxes of your home. You still have the upkeep. you still have the maintenance, but at least the part of the mortgage payment has fallen off. And then we go to the end of the life, you’ll see a drop off in year 2049. That’s referring to the fact that this is a twoperson plan and one spouse has passed away in their 90s and we have a few years remaining for the surviving spouse. So what is meant from all of this? You can see the direction of spending increases over time with inflation and you can see the income that falls below those line and in later years it’s even exceeding the expense line. What does that mean? Well, in this example, we begin on the far left of the chart with some yellow bars. The yellow bars are defined by postretirement income. Maybe you have a rental property that you want to get rid of, but you plan to keep for the first few years of retirement. There’s some rental income for you. Maybe you’re an executive with some stock options or restricted stock that are going to continue to vest the first handful years of retirement, right? Maybe you’re going to work part-time for a few years. There may be a base sort of income there. And then you can see the rest of the portfolio need is being met by a light blue color. Light blue means I’m withdrawing from the portfolio. Okay, so that means I have flexibility in those years. What accounts where and how am I going to take it from? Then we look at the elsewhere in this plan. Look at this really dark blue color. What that means is my social security is coming to me no matter what. Maybe I’m going to take it at full retirement age. Maybe I’m deferring it till 70, but definitely by 70 I have to begin social security. and that income’s coming and it’s hitting my tax return. It’s hitting my checking account. It’s money to spend. It’s there no matter what. And then on top of that, we have this green color. This green color is referring to required minimum distributions that says that in later years if I defer these tax deferred monies. So picture and I don’t I don’t want to get into all the details here but I just want to tell you what if I’m working and I’m a higher tax bracket and then I retire and I’m all of a sudden in a lower tax bracket but in later years I have this income that has to come to me no matter what. Picture all that tax deferred money. I deferred it while I was in those high income earning years. Wonderful. But the goal is to take it out when I’m in a lower income year. If I leave it until later in life, look how high my income is getting on this page. And it’s inflexible. I have to take it out no matter what. What if something happens to one of these two people in the couple and the survivor has all this income, their required minimum distribution that they have to take on the single person’s filing tax status, it all of a sudden becomes much more expensive. The point of this is you go from high tax, low tax, and then creeping back up more than likely if you’ve done a good job of saying saving to a higher tax again later in retirement. Do you really want all this income when you’re in your late 80s, early 90s, or do you want to be enjoying it today? Do you want to push some of that income forward? That’s what that yellow line is referring to. To say, I have opportunities to take income at a lower tax rate. Why would I not do that? And the last thing I’ll say about that is the missed opportunity is if you come to us in later years, you’re excited because you paid less in tax for many years, but it’s a missed opportunity. Should we be filling that 10, 12, 22, or maybe even the 24% tax bracket for you by taking some withdrawals from that tax deferred IRA? Maybe living off of taxable assets and doing Roth conversions. You just want to be able to create a lot of flexibility as opposed to just keeping your head in the sand and looking up someday and being like, “Oh my god, this is more income than I need and I don’t know what to do with it.” And you’ve lost the flexibility. That’s what this slide is showing. I know I got in a lot of detail, but at the same time, you really need to do this exercise for your specific situation so that you can make really good decisions along the way. Now this slide here is saying will this withdrawal rate work? Well, first of all I will say it depends. It depends on your time frame, right? it depends on how much expenses you have and it depends on asset allocation. So how much risk you’re taking. So if you’ve done much in the way of personal finance or reading, a very common rule of thumb is called the 4% rule. And if you look at this page in the middle of the page, we’ve got this yellow color maybe moving into slide orange that’s listed as four. That’s deemed to be a safe withdrawal rate without knowing anything else about your plan. That’s a back in the number put on a napkin number that you can use to live off of. So 4% assumes that you have a 30-year window for spending. It assumes that you have a balanced portfolio and that you’re taking money out each year to adjust for inflation. What I mean by that is if you have a million, year one, you’re taking $40,000 out, 3% inflation rate. Year two, you’re taking $41,200 out and so on and so on to keep up with inflation over time, safe withdrawal rate, not outlive your money. Now you when you say is $2 million enough, you can reverse engineer that. So if your annual spending is x amount of money, you multiply it times 25 to get what’s my target portfolio. So let’s back into this. Say you want $80,000 a year. $80,000 times 25. Remember that’s 4%. So, if I’m multiplying it times 25, means I need a portfolio of $2 million. That’s not accounting for social security, pensions, other income. This is what’s coming from the portfolio. If you want to withdraw $80,000 a year, that would be your $2 million portfolio, and that would be deemed your safe withdrawal rate, 4%. Again, that is just a rule of thumb. It’s not taking in account your specific risk. It’s not taking into account the types of accounts you have in terms of how are taxes to be paid, how are they owed on your particular accounts. That is absolutely going to change over time. And then finally, your plan is not going to be linear. You’re not spending the same amount money every single year. So, how do you plan for that? And when you look at this chart, it’s basically saying, oo, if you go up into the red zone, you’re taking five or six. You’re at risk of outliving your money. And if you go down, you’re taking 3 2 1. You could be celebrating, oh, I’m only withdrawing 1 or 2% of my portfolio. But is that really success? I don’t know for you. Is your goal to leave a large legacy to individuals or causes that you care about? If no, then what’s the point? We want you to enjoy this money, to have a purpose for it. We want you to be utilizing this wealth, the whole reason for saving and being comfortable with it, not to just let it grow out of fear. So, as long as you have a plan for it, we’re going to support you. And often we have to encourage our clients to actually spend to a greater degree.

All right. So, here’s a list of questions saying, “What can I afford to do?” So, the first example is saying, “Can I retire early and maintain my current lifestyle?” I like the second one. Can I retire at 60, update my kitchen, and add a screen porch? I just like the idea of that. I’m going to sit out there, enjoy the beautiful view. , can I retire tomorrow and buy a vacation home? That’s a common example. It’s very common to want to have a second home in retirement and split time near family or in a location that’s more desirable to you. have a place for the family to gather and come together. That can be an important goal. Do I want to retire in three years and instead of purchasing that home, I want to travel extensively. That’s not uncommon either. What does that look like? So, here we list some of the goals. And then here’s an example of if you’re a client of Savant, you’ve seen this. This is our planning software that does Monte Carlo analysis. And Monte Carlo analysis is looking at the fact that I have all these competing goals and I have X amount of income and I have my portfolio. Can I meet all these goals throughout time? So in this spec specific example on this page, it says I have a goal for my basic living expenses, my health care. I want to buy an SUV every so many years. I want to plan for unexpected long-term care costs. That would be nursing home type care or home health care later in life when I have a large medical need and I cannot perform the activities of daily living on my own. I want to travel in the early years of retirement. Maybe I want a membership to a country club in this example. I want to buy a new home and until then I want to rent. Well, in this example we’re saying, well, what’s the base plan? If you’re doing all those things with your specific numbers and goals, we say at 60 you have a 90% or excuse me 95% chance of success. That is really high because our goal in terms of confidence is 75 to 85. So you’ve more than exceeded it. In fact, you’re very high on the confidence zone. So what else can you do? What if I retire early? What if I retire at 57? Oh, because I have modest spending compared to the level of assets I’ve accumulated, I simply fall from 95 to 93. Oh, that’s a still an incredibly high probability of success. So, which do you value more, your time? Do you want to work or do you want to retire? Both are an option for you. Then we look at, well, what if I work till 60, but I spend X amount of money in this example, $750,000 on a second home. Here, I change from a 95% probability to 85%. So, I’m still in a strong confidence zone, and my adviser would still be exper encouraging me to do so. And then I would also have equity in this home for later in life if needed for unexpected long-term care or anything like that. And then what if I have the desire to not only buy the home but retire early. So essentially this is saying I retire at 57 and I downsize the home purchase a little bit from 750 to 450. What are my probabilities of success? So when Ashley said before it depends it depends right what are your goals? What are your resources? How much is the stability and security in your income? What’s the tax treatment of your income? All this is going to define your specific outcomes. And I’d much rather you see you test it out and do this type of planning. We call it Monte Carlo. There’s a thousand different iterations to make sure you can survive not only good, but the more challenging markets. significantly better strategy than doing an Excel spreadsheet and having my average rate of return 6 7% 8% whatever you want to put in your average rate of return because retiring into a market that is declining is very different than retiring to a bull market the sequence of returns matter so that’s why we use this Monte Carlo analysis and finally we have rules of thumb cash flow analysis that’s looking at your specific situation about taxes and where’s the income coming from in any given year timing those pension flows with social security with IRA withdrawals Roth conversions Monte Carlo analysis which is what we just discussed portfolio diversification so making sure that you don’t have undue risk from maybe higher concentration in specific asset classes making sure you’re very diversified and getting the highest expected return for the level of risk that you’re taking. Long-term focus, please. No jumping in or out of your plan. It’s a long-term plan. We can pivot and we can change and make adaptations along the way. But what you can’t do is get fearful and jump out and go to cash and expect to get back in an opportune time to not drastically change this odometer here that says 82% chance of success. And finally, and I should say that’s a speedometer, it looks like to me, use a professional to help you navigate these decisions, especially one who’s helped multiple individuals and can bring to the forefront for you ideas that maybe haven’t even been considered. All right, so that’s a whole lot about spending. Now, let’s be careful about the tax impact on a retirement income. Ashley, thanks Danielle. I’m in complete agreement with you on that one. I always love digging into financial plans with clients so we can learn more about what they liked and what they what they really care about. so now let’s turn to taxes because even in retirement they’re still really a big part of our equation here. They just show up in different ways now. So one of the first things we really like to discuss is Roth conversions because Roth conversions are one of the most powerful planning tools that we use. But when we do that timing is everything. For those who aren’t familiar, a Roth conversion is when you voluntarily move your assets from pre-tax IAS into Roth IRA. So, you’re paying the taxes now and then in exchange, you get tax-free growth and taxfree distributions later in life. Roth conversions are often the most successful in a window after retirement, but before required minimum distributions, or RMDs. In many cases, your taxable income is lower during that period. So then you might have room to recognize income a little bit more strategically rather than being forced into it at your RMD age. So the goal is really to not avoid taxes altogether because we know we can’t, but really to smooth it out over many years and reducing our lifetime tax burden, increasing flexibility. On our next slide here, we’ll see that when it comes to retirement, what you own matters, but where you own it matters, too. So, as you may know, there are different types of accounts can be taxed differently. On the screen here, you see that there are three different types of tax buckets, if you will. If so, we’ve got our Roth, traditional, tax deferred, and our taxable accounts. If you’re familiar with Savant, you may also be familiar with our belief in the concept of asset location. So we focus on investing our highest growth assets in Roth accounts since those assets are going to grow and be withdrawn taxfree. Our income oriented assets go into traditional IAS since that income is tax deferred until we withdraw it. And then the most taxefficient assets will go into our taxable accounts like an individual or joint brokerage account or trust accounts maybe because those gains are taxed at capital gains tax rates which are generally lower than ordinary income tax rates. We like to look at our portfolios at an overarching household level not account by account because it helps us to protect our tax efficiency over a lifetime. On our next slide we have some great tax tips. So when we talk about tax planning, the goal is very simple. Legally minimize taxes over your entire lifetime, not just this year or just in this account. So a few levers that we like to look at can include diversifying our income sources across different taxable and tax deferred and tax-free accounts. The next one is to adjust our income timing when possible. To adjust our income timing when possible. This is often a pretty popular strategy for some of our business owners who have varying levels of income from one year to the next. The next one is using tax loss harvesting. We’re appropriate in our taxable accounts like we referenced in our previous slides. We also take into consideration state tax planning. For example, if somebody wanted to move from a lower tax state to a state that has a higher state income tax, then we might want to work to do strategic Roth conversions in the lower income tax state so that we can help to reduce our overall tax burden. The main takeaway that we want is that small consistent decisions can help to create really meaningful flexibility and spending power in our retirements. So here you see that another really key important question that we get is regarding withdrawals because it’s important to know that the withdrawal order matters not just from a tax perspective but also from a timing and penalty perspective as well. There are age thresholds and penalty rules that we have to keep in mind especially for our early retirees. They reach a point where they can draw from really almost any account taxable traditional IAS Roth IAS or maybe they even have some cash reserves. And that’s where the real question shifts here. We ask not where can I draw from, but where should I be drawing from? And that decision isn’t really about avoiding taxes this year. It’s about making sure that we’re smoothing it out over the rest of our lifetime. On our next slide, we see the different tax brackets and how they impact us. So, this is where tax bracket management can come into play and where a lot of our clients tend to get stuck. A very common situation that we see is a couple who’s retired. They have steady cash flow needs and plenty of flexibility. They have taxable assets, traditional IRA dollars, Roth assets, and those cash reserves we discussed. They look at all of that and say, “Gosh, I’m really not worried about having access to my money. I just don’t know where to start. Which account do I take money out of?” These brackets themselves aren’t really the point, but what matters is how much room you have in each of these brackets over time. and then how we can intentionally fill the space in the lower tax brackets to avoid being subject to higher tax brackets down the road. Sometimes that means just taking just enough from our traditional IAS to stay in a lower bracket. Maybe it means layering our Roth distributions on top of that to keep income from creeping higher and maintaining our purchase power. Other times it means using our taxable assets strategically, especially in years where our income is temporarily lower. Like I said, the goal isn’t to avoid taxes because we can’t, but we can spread them out more intentionally so that you’re not forced into higher tax brackets later due to things like our required minimum distributions. This can be especially important for married couples because sometimes when one spouse predesceases the other, we end up finding that the impact is greatest when the surviving spouse might find themselves in the 35 or 37% tax bracket because they’re taking full required minimum distributions that both spouses would have normally taken in the married filing jointly tax brackets. Finally, our taxes really directly connect to legacy and giving. There are a number of tax smart ways that we can approach charitable giving or gifting. Maybe we’re bunching donations. Maybe we’re using donor advised funds to capture appreciated stocks that we’re donating. Maybe we’re using qualified charitable distributions or QCDs for those who are eligible in their IAS. Maybe you would like to see your heirs enjoy their inheritance while you’re still around to be a part of it. We can talk about gifting within federal gift tax exclusions at 19,000 per person per year here in 2026, but there are a number of tax smart strategies we can review for that as well. At the end of the day, the right strategy depends on your personal goals, your account types, and your income picture. But it’s worth knowing that there are tons of options that we can review to support your goals while still improving your after tax outcomes. Next, we’re going to shift to Danielle to discuss some common planning missteps and then I’ll come back to tie all the entire framework together at the end. A thank you, Ashley. Very well done. And you’re getting in the details of that slide that I love like the future income coming back to today. How do you plan for that? And you’re talking about the surviving spouse and potentially being a 32 35% bracket. Not only is that expensive there, but also a little pro tip too is the Irma, the income related monthly adjustment amount for your Medicare premiums can just become really high. So, there’s a lot of planning involved with this. I love when you said can I or where should I? That’s that’s beautiful. If you only have one type of account, the can I the answer is for where should you go? You have no flexibility. But if you’ve done planning and you have multiple buckets to pull from, you have greater flexibility in your retirement and greater security that your money is going to be there for you throughout your lifetime. So, love that. The other thing I wanted to add is I’ve been seeing while Ashley was speaking a few questions came in. So, please if anybody else has questions, continue to put those in the chat. Ashley and I will be addressing those where we can at the end. we’ll get a few of them and then those that are unanswered, we’ll have a member of our team follow up with you directly. So, with all of those objectives, again, this is just education. Ashley and I have such a passion for this and we can, this is our life’s work. We do this every day. So, your specific situation is where you should sit down with an advisor. If you have an advisor already, discuss your situation. Some of this is probably somewhat familiar to you. If you don’t have an advisor, leave a note in the chat. So Savant can follow up with you, reach out, make an introduction of yourself so that somebody can help you and guide you along the way. But at a high level for education, what are some of the things that people get wrong? What are missteps along the way? So we’re beginning with what’s the number one priority? First of all, we’ve discussed throughout this presentation, do I have sufficient wealth to sustain me for the rest of my life? Also, it can be very important if I have a significant other, a spouse, if something happens to me, will they be well taken care of? And finally, a priority should be in terms of getting professional expertise for all these different areas. We’re giving you some highlevel nuggets, but then drilling down into your specific situation is going to be very important to determining your chances and probability of success with X amount of dollars. Whether it’s 2 million, five, I’m just I’ll make up all kinds of numbers. Half that number, four times that number, that’s completely up to you and your particular situation. But having a wealth adviser or a financial adviser in your corner, a tax professional, estate attorney to navigate all of this is very important and to have it established before you step off into the retirement zone. So here, what are the pitfalls with this if that’s your priority? We’ve discussed inflation. I mean, look how modest this inflation number is. Here we’re looking at over 30 years at just a 2 and 12%. 2 and 12% because it’s over a long period of time. Well, that 2 and 12% more than doubles the expenses from the beginning of retirement. You go from 96 to 200,000. How is your portfolio planning to sustain you for over 30 years and fight inflation and continue to deliver the income that you need? Inflation is a very big pitfall to be careful of. investment return assumptions, average market returns. Again, if you’re an Excel individual, it’s there’s nothing wrong with Excel. I love Excel, too. It’s been around forever. But having your average rate of return can be misleading, especially when the sequence of returns really matters in retirement. Are you going to retire and have a decline unexpected the first one to two years into retirement? that can have a very different experience than someone who retires into a bull market and those uncertainties you got to make sure that you can survive not only the good but the more challenging scenarios too. That’s why we really rely on Monte Carlo analysis over an average rate of return. And then when we look here, the unknown and the unexpected. Pension elimination. Maybe your pension plan disappears. It no longer exists. It’s frozen. Things like that happen. Something that you’re planning on changes in a material way. Reduction in social security. That generally would be speaking to if something happens to one of you and the survivor is only going to get the greater of the two benefits. What does that look like for the family and potential outcomes? long-term care needs. We want to plan for what if the last three years of life you have a $10,000 a month expense in today’s dollars. So that can be significantly more decades from now at the time you go to draw your funds. What does that look like? Where is that money coming from? Is it coming from equity in a home? Is it coming from part of the portfolio? From a health savings account? What does that look like? How can you survive all scenarios? So these are just some examples of the common pitfalls. And then the last piece that’s bringing in is saying volatility. Volatility exists in markets today and it’s going to exist throughout time in your retirement. Right? And what this page is showing you the difference between the calendar return. So the calendar return is what is looking in any given year is either the green is the positive return for the year and the red is a negative return for the year. You’ll see that there’s a lot more green on the page than red. But when the red comes they can be quick and steep. And if you look at this, not only is that the total return for the year, but look at the bar that extends above and below the line. that is showing you what’s the variability, the largest intrayear gain or loss and you can see they can be quite different than where the actual calendar year ends up. The point of the message is that variability exists, volatility exists. You need a plan so that you stay the course so that you do not derail yourself by making a significant change at an inopportune time. So, just know that volatility exists and it’s can be a misstep, too, if you don’t have a strategy in place for addressing volatility and especially for the timing of your withdrawals. All right, Ashley, you want to pull it all together for us? Yeah, and that’s a great reminder on volatility. Really helpful and timely, especially with what we’ve been seeing in the world today. So, we’ve covered quite a bit in this presentation and as we’ve discussed, there are so many different strategies that we can implement to help to optimize their retirement plan. And putting it all together is where planning becomes more actionable? So, when we bring all of these different things, lifestyle, cash flow, taxes, and planning together, this is how we get to circle back to that original question. Is $2 million enough? So on this slide right here, what we see is that planning really starts for a with a goal for your consumption. In other words, what do you want your retirement accounts to fund when you retire? When we pressure test that goal against reality like inflation, life expectancy, health coverage, costs, we also want to make sure that we include our needs, wants, and wishes as well. Because your retirement isn’t just about paying the bills. It’s also about enjoying the life that you have and what you’ve worked so hard for all these years. From there, we’ll plan to test our financial plan in our financial planning software using the Monte Carlo analysis, which Danielle referenced earlier in our presentation because this is how we model so many different market environments instead of assuming that the market is always going to behave exactly as we’d like it every single year. Lastly, what we find is that health coverage and long-term care needs can greatly impact our financial plans as well. So, like Danielle said, we have to be prepared for that. Retirement planning is not a solo sport. We said earlier in our presentation that the best plans involve collaboration between financial adviserss, tax adviserss and also estate attorneys. While the can certainly function as a one-stop shop, our primary objective is alignment. Making sure that each of our different components of the financial plan are reinforcing the others instead of creating friction elsewhere. Now, every situation is so different. If today’s conversation sparked questions, that’s a good thing. It means that you have uncertainty, but that doesn’t make you unprepared. It just means it’s time to have a conversation with someone. And our ideal futures financial health assessment that we have can help you to self-evaluate by measuring where you’re at right now, what your confidence level is in each of our 10 key areas of financial planning. It gives you an idea of what kind of gaps or areas of low confidence might exist so that we can identify the type of help you need. And then Savant being focused on holistic and comprehensive financial planning can help you with these different areas.

All right, great. Thank you, Ashley. And it’s not a solo sport. I love it. And that’s probably the biggest endorsement for why we work as teams here. But with that said, if you need to connect with Savant, if you something sparked that thought that now is the time to connect, please go ahead and click on this link that’s offered here in the chat and then we need to share our disclosures with you and then we can jump on. Again, this is all education today. Please seek advice on your specific situation. And Ashley, as I’m seeing them here, there’s a handful that are on tax. So maybe I’ll begin with you if that works. Okay. All right. Sounds good. All right. So, the first question I’m going to give you, I like this one because they’re saying, “When doesn’t this work?” They say, “When do Roth conversions not make sense?” That is such a good question because Roth conversions don’t make sense in every situation. They’re a lot less attractive in a couple of scenarios when something like when somebody needs all of their cash flow for current spending or maybe you expect to be in a meaningfully lower tax bracket later in your life. The key to a Roth conversion is that it’s a trade-off. You’re choosing to pay the taxes today in hopes of creating additional flexibility down the road and tax savings later. So whether that trade-off works will depend on your income level, your cash flow, your time horizon, and of course legacy goals. So, we very rarely will look at Roth conversions in isolation. Great. Thank you. You want to pull a question up for me? Yes. Let’s talk about the 4% rule. Does the 4% rule still apply? Oo, someone that reads up on finance because that is a hot topic. Let me tell you that 4% rule is a rule of thumb as I talked about before, but the creator of that rule has made an argument of late that the 4% rule is now the 4.7% rule because of higher interest rates. At the same time, you also have other experts that say due to higher valuations in the market and longer longevity, the 4% rule is now the 3% or the 3.3% rule. Oh, so 4% is still in the middle. It’s still a rule of thumb. And really, that’s why we want to focus on the money, Carlo, because things are not linear. I think it’s a very good thing for the exercise of this. If you’re taking 4% of your portfolio, that’s the same as taking what do you want to spend and multiplying it times 25, right? 25 is 4% of 100. So if today’s exercise, again, if we’re spending the $80,000 a year, that means I need a portfolio of $2 million to sustain it. So that’s how Ashley and I are answering the question, is $2 million enough for me? But as we’ve shown you, there’s so many components to this that is it depends. So, all right. Thank you, Ashley. All right. So, here’s another tax one that I see for you. How do you balance tax efficiency with keeping flexibility for unexpected expenses? Yes, this is a very common balancing act question. We like to look at diversification beyond just our investments and also focus on flexibility and tax control. So we want to make sure we have diversification across different tax buckets like we saw in the previous slide. So the goal is to make sure that you have enough flexibility so that when something unexpected comes up then you’re not forced into a bad tax decision just to be able to raise cash. We don’t want to we want to make sure that we’re being strategic about our tax brackets so that we can have enough when we need it and not be surprised. So most of the time that means that if we have a cash need we’re going to pull money out across a mix of different accounts taxable, traditional, and Roth rather than defaulting to just one account and taking one big distribution out. And this is where having a coordinated plan really matters because the answer can change from one year to the next. Love that. I think we probably have time for one more question today and then again any questions that we don’t get answered Savant’s happy to follow up with you directly. Leave a message in the chat. This is a really good one Daniel. I think you’ll like it. Is it better to spend money early in retirement when I’m still healthy? Oh, yes. As long as your portfolio can sustain it. Why do I say yes? Our goal, what Ashley and I do not want you to do is to generate a significant amount of wealth, get to the end of your life, having an even greater amount of wealth and have regrets on using that money. We want you to have purpose. We want you to have joy in using that money. And early years in retirement, it can be for people or causes that you care about. Maybe some of the people in your life have needs that you want to help because it’s a time in life where you can see it being used, right? As opposed to leaving it when you’re when you’re gone and you’ve passed. But essentially, the way I think about that, early retirement, you’re feeling good, you’re healthy, travel is a really big common goal. And let’s be honest, when you’re in your 80s, taking that international flight, generally that long flight is just not as enjoyable. It’s not as attractive to you. It’s not how you want to spend your time or how you want to spend your money. So do that while you feel good, while you can, while you have the energy and you can physically do it. Whether that’s budgeting for the first 10 years retirement, 15, 20, that’s going to be unique to you and your specific circumstances. But generally, yeah, in the early years, spend more. You have to have this focus into your plan. Remember, we said it’s generally not linear. How do we have a spending goal that’s more aggressive in the beginning years, and you can still sustain your lifestyle throughout time? But generally what happens is you spend you spend and then it falls down a little bit and then maybe it picks up again later in life because of unexpected unfortunate health expenses can just become a bigger part of what you do. So again this is planning for the unexpected but making sure that you have the guardrails in place and allowing and freeing yourself to actually spend the money and enjoy it. So I want the answer to be yes. I want your plan to support it. So work with your advisor to figure out how you can get the answer to be yes. Okay. So I’d say that kind of is a wrap. Thank you so much for joining us today. It was such a pleasure. Thank you Danielle for leading our conversation together. Was a great presentation. Thank you. Bye. If you enjoyed this webinar, visit savantwealth.com/guides and download our complimentary guide books, checklists, and other useful financial resources.